CRTC eases ‘thou shalt’ to ‘thou should’ by Susan Krashinsky

Source: Globe and Mail

The country’s broadcast regulator is facing a fight over its attempt to rein in a rapidly changing TV industry – and it has all started with a minor rewrite, of a single word.

BCE Inc. (BCE-T39.670.651.67%), which owns a satellite TV service as well as a number of television channels including TSN and Bravo!, has challenged the Canadian Radio-television and Telecommunications Commission on a number of items in a key decision released last month. At the time, the CRTC created a new code of conduct for “vertically integrated” companies - cable and satellite companies that also own TV channels. In a 12-page letter sent to the CRTC on Oct. 5, Mirko Bibic, Bell Canada’s senior vice-president of regulatory and government affairs, outlined a number of reasons why the decision is “operationally unworkable.”

The CRTC responded last week by changing a single word in the new code – replacing the term “shall” with “should” in a number of instances, to reflect the fact that the code is meant to be a set of guidelines, not a binding regulation.

That seemingly tiny change signals a larger set of challenges to the CRTC’s attempt to address growing consolidation in Canada’s broadcast industry, following a pair of major deals last year that saw BCE acquire CTVglobemedia Inc.’s TV and radio channels, and Shaw Communications Inc. buy the CanWest broadcast assets.

“The commission obviously didn’t address everything,” Mr. Bibic said in an interview Tuesday. “We’ll be back at it … to point out that if you’re going to have a framework like this, it needs to work commercially; otherwise the [CRTC] is interfering needlessly and in a heavy-handed way.”

One example of BCE’s objections is a ban on giving a head start to newly launched cable TV channels. If, for example, Rogers were to launch a new channel, it cannot put that channel on Rogers cable without making it available to Bell’s satellite customers, or Cogeco’s cable service. BCE argues that the rule is ambiguous. If Rogers has to give a channel to another cable company before a deal is done, there is nothing in the code to say what that cable company should pay to Rogers in the interim, how the channel will be packaged on that service, how it will be marketed – all parts of a normal negotiations to distribute a TV channel.

“It was pretty clear our intention was not to make it [the code] binding. We have the power to issue guidelines but those would not be binding. It’s a correction, it’s not a change of direction,” CRTC spokesman Denis Carmel said Tuesday. “A lot of those [other] issues can be dealt with in follow-up proceedings.”

Bell Media operates BCE’s broadcast properties. Its sports channel, TSN, is paying more for the rights to the events it broadcasts, and asking bigger fees from distributors for the channel. The company is concerned that the CRTC could be dragged in on disputes not relating to regulatory violations, but by competitors looking for help securing a lower price for their services.

Since the September decision, Mr. Bibic said BCE has seen a number of negotiations stalled by other companies approaching the CRTC with objections to BCE’s terms. It intends to continue to raise issues with the CRTC. “We obviously disagree with the [vertical integration] policy generally,” he said. “But if it’s going to be there, it needs to be workable.”